Page 59 - SBR Integrated Workbook STUDENT S18-J19
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Revenue
If a performance obligation is not satisfied over time then it is satisfied at a point in
time. This is normally when the customer obtains control of the promised asset.
An entity controls an asset if it can direct its use and obtain its remaining benefits.
Some indicators that control has passed to the customer include:
the customer has physical possession of the asset
the customer has the significant risks and rewards of ownership
the customer has legal title
the seller has a right to payment.
Example 7
Control
Glofrith purchased a luxury apartment block many years ago for $1.2 million.
On 31 December 20X1 it sold the block to a customer for $2 million and
transferred legal title. Glofrith has retained an option to repurchase the building
for $3 million in 3 years’ time.
Explain when Glofrith should recognise revenue from the above
transaction.
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